2007 - 2020

London First, Last and Everywhere In-Between

imageLondon First now wants £1 Trillion pounds of future investment over 35 years. It’s an infrastructure drain that distorts the whole of the UK argues John Warren.

London First is a very appropriately named, major pressure group of big business organisations, operating in almost every conceivable sector (’Our Members’); which has the following mission “to make London the best city in the world to do business”. In 2012 London First produced a Report titled ‘London’s Infrastructure: Investing for Growth’. It made the following claim, that is difficult to challenge:

“Infrastructure’s critical role in supporting economic growth is now widely recognised by policymakers and politicians alike. Analysis by the International Monetary Fund (IMF) has shown that “in a sample of advanced economies, a 1 percentage point of GDP increase in investment spending increases the level of output by about 0.4% in the same year and by 1.5% four years after the increase”.”

High on the list of London First targets up to 2012, was infrastructure spend on transport, which even with all the public resource investment advantages that have been allotted to London by the sacrifices in self-interest of everyone else in the UK, turns out to be not enough. So let us list (by no means exhaustively) what makes up not enough investment for London, paid for by everyone in the UK: the Olympics, East London regeneration, Millennium Dome, Crossrail (1), St.Pancras-Channel-Tunnel (HS1), Docklands Light Railway, Jubilee Line, Wembley, HS2 (which begins in London and reaches other places, but not in our lifetime), etc., etc.; and now Crossrail2 (“serving London and the wider South East”).

Almost all the UK ‘big-ticket’ spend is allocated to London, but it is never enough for a City that has left the rest of Britain behind in its pursuit of being what it calls a ‘Global Hub’. Now, London First has moved on to new and ever larger demands in ‘London 2036: an Agenda for Jobs and Growth’ (2015):

“To underpin London’s ability to attract and retain talent, and to create growth and jobs across more areas of the city, London needs an effective, integrated and affordable system of transportation and housing. The city’s rapid population growth is putting increasing strain on its existing infrastructure. The draft London Infrastructure Plan identifies over £1 trillion of spending that is likely to be required between now and 2050 to support the city’s population and economic growth”.

London First now wants £1 Trillion pounds of future investment over 35 years (equivalent to nearly £30Bn in current values, every single year for 35 years), but in its plans particularly for greater fiscal autonomy, the ambition implies that although it expects all of us everywhere to continue to make London our collective first priority forever and a day (what do they believe “London First” actually means for the rest of the country?), London has already exhausted the capacities and resources of the UK.

We can certainly confirm that London has uniquely cornered the UK Government infrastructure spend, from London First’s own Global Hub comparisons:

“The biggest challenge for London in meeting its investment requirements is funding. London is much more reliant on national decision-making and national spending transfers than comparable cities: for example 74% of GLA and borough expenditure is funded from intergovernmental transfers, compared to equivalent figures of 31% in New York and 18% in Paris”.
(source for 74%: Enid Slack, ‘International Comparison of Global City Financing’ 2013)

How does the extraordinarily lopsided nature of London’s international comparative investment profile come about? If London depends (by a factor of 3 or 4 times, compared with New York or Paris) on ‘national spending transfers’ or the allocation of central government spending (intergovernmental transfers) rather than the private sector; at least we can now see why this may happen, and why London receives this exceptional treatment and special help from government, where other ‘Global Hubs’, do not. Nobody in France or US, outside Paris or New York, is persuaded to sacrifice their own region’s or state’s life chances or best interests to allocate their hard earned resources to a City-State monopoly, intent on acquiring sufficient power and influence to suck the lifeblood out of everywhere else in the country, simply to further its own narrow interests. In Britain we do things differently: effectively every region or nation outside London/South-East is required to serve London first, and to recognise and accept its own lowly place in the political food chain.

london_night_view_shutterstock_86318047.jpg__5175x2446_q85_crop_upscaleThe difficult thing to understand is how such a strategy in Britain, to put London first in all calculable circumstances, supported to exceptional degree by central government and all the Unionist political parties in concert, can yet be called by its Unionist apologists, a ‘free-market’. Clearly, it isn’t. It isn’t free and it isn’t a market; it is a London monopoly.

Let us look at how this strange, British, lifeblood-draining, monopolistic monster that London has become, operates. Given the scale of the London First, Global Hub demand for resource, we may reasonably consider that this ‘re-allocation’ of total UK resources draws large sums of investment away from the critical infrastructure spend in the rest of the country. Neither London First nor the Westminster Government can have it ‘every way’. Placing ‘London first’ is not a definition, synonym or tautology for the expression ‘Britain first’; although that, precisely is what we, the credulous public, are expected to believe. Fortunately for us, and of course following sound methodology, in a useful ‘consilience’ of the evidence provided by Enid Slack or London First above, we can illustrate the gross over-concentration of UK public sector investment on London quite independently.

Conveniently the Institute for Public Policy Research (IPPR) gives the 2013 infrastructure spending in London and the South-East, compared with England as a whole:

“When we consider transport infrastructure projects which are deemed by Treasury and the Department for Transport to be primarily ‘regional’ and which involve some element of public spending, we can identify 69 projects with a combined projected cost of £32 billion. Here, a very clear picture of the dominance of London becomes clear. Two-thirds of planned spending on regional transport infrastructure is committed to London alone; when combined with projected spending in the South East, 86 per cent of [spend] (sic) is committed to London and the South East. By comparison, just 6 per cent is committed across the whole of the north of England.”
(‘Still on the Wrong Track’: IPPR North, 2013; p.8)

A substantial element of the final funding of this joint public-private £32Bn is private sector, but if we focus on the £8Bn where the public sector is the sole funder, then London and the South-East’s share drops to a meagre 84%; a drop of a mere 2%. All that Public Sector effort; all that Parliamentary representation from the rest of England; all for 2%.This is how democracy works in Britain.

London alone accounts for almost 80% of all solely public sector funded projects in England. In the 2011 census, London’s population is given as 8.2m (Office of National Statistics). This represents 15.4% of the census population for England & Wales: 15% of the population merits 80% of the national public-sector infrastructure investment. This means that the other 85% of the population of England & Wales receives just 20% of the public-sector infrastructure investment. Remember, output returns follow investment (London First, above): no wonder London is more successful than anywhere else. All the resources are concentrated in one place, and on the 15%: the few. Ironically, as London First also imply above, New York or Paris have to look far more to the private sector for investment. In London its success, its international ‘edge’ is built far more on Government, public-sector investment. London has captured Government and all the Unionist political parties; London is, in effect a socialist monopoly.

The analyis above is general. We can, however take the ‘consilience’ of independent sources of confirming evidence for the case that London is over-resourced further, by examining individual infrastructure projects. Therefore, let us examine an example project in illustration of the proposition. HS2 is presented by Government as a UK-wide benefit, but as always with British ‘Big-Ticket’ items, the investment begins with London, remains concentrated on the London/South East construction for most of the foreseeable planning horizon, and assumes that over any timescale, for the rest of the UK there is only one possible desired (or available) final transport destination: London.

In fact the whole HS2 project would make more sense (in terms of both purpose and cost) if the rest of the UK could avoid a new, expensive direct route to London altogether, and was simply routed to link the HS2 line directly into an interconnecting hub on the current HS1 line to Europe, east of London. This would provide all the northern and midland UK HS2-linked cities with direct access to the Channel Tunnel, and Europe (without a detour to London), and yet automatically offer a direct connection into Central London, via a short spur onto the existing HS1 line, at (relatively) minimal additional cost. It should be noted that such a link is (and has been) a basic EU transportation objective, but one conveniently ignored and buried from public view by the essential parochialism of British government.

The current Government HS2 proposal requires HS2 passengers from north of London, bound for Europe, to travel to London simply in order to change stations (on foot?) between two separate terminals in London to access HS1 from HS2. As a supposed transport strategy this is both absurd and, as an offer to nationwide UK rail users, it is quite outrageous. Furthermore, the total estimated cost of HS2 (probably a gross underestimate) is as follows: total cost Phase 1, London-Birmigham (principally the cost of exiting London, much of it underground) £22Bn. The total cost of the whole HS2 project, including London and extending throughout much of England by 2030, is £42.6Bn. Over 50% of the total cost of HS2 is therefore spent principally just to exit London, and again to serve the same narrow sample of the UK population that has HS1, and which is already in receipt of a surfeit of public investment funds. In reality the more probable and practical London-centric Government purpose of HS2 (in any forseeable policy future) is simply to turn Birmingham into a commuter-belt feeder town for London; and for broadly the same reasons (mutatis mutandis) that make Crossrail economically so attractive for London, as we will see below.

Let us now look at a second, independent project illustration of what public investment in infrastructure on such a scale means for London, and why London thrives. Let us look at Crossrail (crossrail.co.uk). In brief, Crossrail is a cross-London rail transport project (the largest in Europe), which began in 2009, is now around 70% constructed, and is due for completion in 2020. It increases Central London’s rail capacity by 10%, cuts journey times, and provides 10 new stations among the total 40 Crossrail stations on the route. The route extends from Reading in the west to Shenfield in the east; but the key investment relates to the requirement to lay the route underground, 26 miles of new tunnel construction in Central London; from just west of Paddingdon, under Bond Street and Liverpool Street to Canary Wharf, and (just short of) Stratford in the east. Crossrail claims the “funding envelope” for the project is £14.8Bn.

Beyond the obvious transport benefits (which are important but not germane to the case here so will not be discussed) there are other factors, connected with transport but at least as critical, justifying the investment, which Crossrail refers to in terms of the broader economy (economic activity and employment) and regeneration. In its summary of numbers on its website Crossrail claims the following:

“Construction of the new railway will support regeneration across the capital and add an estimated £42bn to the economy of the UK.”

Funding of Crossrail is around £15Bn, while economic return (over the first few years alone) is estimated to be £42Bn. This is how major public infrastructure investment creates the Public Good, and why it serves London so well. In 2012 Crossrail made the following statement:

“Crossrail could help create £5.5 billion in added value to residential and commercial real estate along its route between 2012 and 2021 according to new research for Crossrail by GVA, the UK’s largest independent commercial property consultant. The report illustrates how Crossrail will have a marked impact on a number of central London and suburban locations along and around the Crossrail route where the new railway will help stimulate investment in commercial activities, retail and housing.”
(For the full GVA report go to gva.co.uk/regeneration/crossrail-property-impact-study).

Within only one year of completion of the Crossrail project in 2020, GVA estimate that £5.5Bn will have been added to the value of land around the project stations. This value is a direct product of the publicly funded infrastructure investment in the Public Good.

CBRE Residential, which specialises in central London property, independently produced a more up-to-date report in 2014, of the property dynamics of the project in ‘Crossrail: The Impact on London’s Property Market’, which again confirms the claim and provides further independent evidence of the general proposition about the large-scale benefits of public infrastructure investment for economic growth. CBRE Residential make the following point:

“We anticipate total house price growth of 13% around Crossrail stations between now and 2018, with up to 20% in Central London. This is expected in addition to underlying capital growth.”
(See http://www.propertyweek.com/Journals/2013/12/09/q/j/s/Crossrail-The-Impact-on-Londons-Property-Market.pdf).

CBRE Residentail made the following more detailed predictions, which implies that this price growth is entirely due to Crossrail:

  • House price growth across the property sectors around the Crossrail stations could add £14.7Bn to property values
  • 2.5% per annum growth in property prices is predicted around these stations over the five year period up to 2018 outside the Central London area
  • Within Central London property prices in the areas around Crossrail stations are expected to increase at 3.7% per annum over the same period
  • As the quotation above states, this price growth is expected “in addition to underlying capital growth”.

Confidence in the Crossrail project and the economic expectations it promises have been raised by Crossrail2 being set up (crossrail2.co.uk), with £80m already supplied by government to develop initial plans.

All these examples establish the existence of a Public or Common Good in our society which is served and enhanced by public investment in infrastructure. This Public Good is critical to the life and prospects of each and every community in which investment is made, and to the wellsprings that energise economic growth. The focus on the Public Good simply highlights awareness of the shared elements of enhanced activity and value produced by public infrastructure investment in communities, that too often remain unnoticed, unrecorded, and unacknowledged in our interpretation of the forces that determine the social and economic world, but are nevertheless necessary for the achievement of dynamic, growing and active communities. An awareness that is too easily lost or ignored, consciously or unconsciously, and at great social and economic cost, in the urgent search each person makes for indvidual advantage, or issuing the critical demand for individual responsibility.

Public investment in infrastructure typically provides a catalyst for what I would describe as spontaneous dynamics; a natural invigoration of economic activity and growth in the locations where the investment is made, and where the financial value produced by this activity is most powerfully concentrated, and expressed quantitatively through measuring the defining economic characteristic of location; the value of land. This beneficial impact on land values is amply demonstrated above by the Crossrail, QVA and CBRE Residential reports.

This should lead us into a careful exploration of how this Public Good is created by public investment in infrastructure, who gains from it, and how the public purse that creates the Public Good may earn a return for the value it creates and for the investment it has made. This in turn should remind us of the wider lessons of our recent political experience; of the shortfall in government revenues and resources, of the problems of taxation, of the burden of taxation on ordinary people, and of the vexed problem of the kind of taxes we set, or the problem of collecting taxes fairly and cost-effectively.

Generally we tax the wrong things; by which I mean we attempt to tax things that are intrinsically either capable of being relatively easy to avoid (or even evade), like profits or capital gains, or even income (for those outside standard PAYE); things that are intrinsically difficult and costly to tax, or both. There are historical reasons for this defect in public policy, but that is no excuse for a form of obtuse modernity. Worse, we tax hardest the very things we wish to encourage: labour, investment, enterprise; thus we create ‘deadweight loss’, a drag on activity that destroys the economic growth we are trying to encourage. We have thus turned the raising of public revenues into something between a paradox and an oxymoron. In consequence, every day Governments face unresolvable dilemmas or ‘least-worst’ outcomes as the only available solutions to problems, from a menu of unpleasant options which the conventional wisdom has made inevitable. The result is seen too often in public policy; for example in serially unusable Budget measures produced over several years by George Osborne.

Land offers a fair and effective base solution for the dilemma. We have seen above what happens very quickly with major infrastructure investment; value is created in land by the transformation of infrastructure investment into the Public Good, that immediately is captured to varying degrees by the land values (best) served by the investment in a specific community location, for whatever purpose (such as residential, commercial, retail or leisure). Currently the landowner is the sole beneficiary of that value, and it is a value that is acquired completely free.

The concept of Annual Ground Rent, AGR (sometimes known as Land Value Tax, LVT, or LVR) has been developed specifically to focus on this creation of value in land by the Public Good, and to provide a fair return to the public purse and the community for its investment, and for the Public Good value that is created. AGR, which is a rent or charge payable by the landowner to the public purse (the community) for the Public Good value captured by the land, solves many of the most difficult problems intrinsic to the vexed problem of arbitrary taxation (and for the taxpayer eliminates the costs of avoidance in professional fees); while adding a further dynamic to the economic growth the Public Good has already created (through allowing the possible reduction in ‘deadweight loss’).

The landowner made no contribution to the infrastructure investment, or the beneficial effects it produces for the economy or community; the value simply accumulates by automatic transfer, and the landowner is rewarded simply for being the landowner. Indeed in some not necessarily rare cases, the land may be unused or derelict (and the blight created by dereliction or by the sheer inertia of the landowner may have directly damaged both economic activity in the area and local land values), and yet the value of the land may be transformed by the act of public infrastructure investment. This is what makes infrastructure investment one of the most powerful tools of government to promote economic growth, not least in run-down areas.

AGR simply provides a fair rent to the community that made the investment and created the public economic value that may be quantified and extracted from the Public Good, rather than being captured by private interest as a perpetual free gift of land value increases to the landowner. Equally importantly, AGR offers a fair and equitable system to all taxpayers that actually serves real, rather than fake competition.

This is not the most important value of AGR. The greatest value of AGR follows from the fact that when fully implemented, it reduces ‘deadweight loss’ in the economy; it unburdens the individual or corporation of much of the heaviest burden of tax on labour, investment or enterprise. At the same time in charging AGR – a land rent, it brings the community as a Public Good back into the centre of the public investment-return-on-investment equation. This in turn changes the relationship between the individual and community interests.

AGR allows every individual freely and openly to express their individuality; to pursue their own ambitions, aspirations – even dreams – but at the same time to know that while they do so, at the same time they are serving the ambitions, aspirations and dreams of their community. The two can be in harmony; they are not opposed. AGR brings together both the interests and the contributions of both the individual and the community. We may call this a return to Enlightenment (and it should be no surprise that Enlightenment philosophers and their disciples first understood the power of this resource of land and the idea of a fair rent for the unearned increase in value), and it breaks with the excesses of the past, and our discredited present: the futile continuity of 19th century prejudice or 20th century ideology, that has finally issued in so much rank, failed 21st century dogma, that has finally brought us to where we find ourselves today.

It need not be like this.

Comments (24)

Join the Discussion

Your email address will not be published. Required fields are marked *

  1. John Page says:

    Thank you for this stimulating piece, John
    This needs to be carefully studied, widely distributed and debated.
    (The best example of the justification for taxing land was the development gains that property owners made in London on the back of public investment on the Jubilee Line. (I recall £19bn private gains on the back of £3bn public spending))
    Thank you, Bella for consistently making a range of thought provoking material available.
    John Page

  2. Ian Kirkwood says:

    A comprehensive summary of how our tax system unfairly benefits London and the South-east. The compound effect of centuries of this is expressed in inequality in every periphery of the UK.

    Warren describes clearly how site values are manufactured by all of us working together. No part played by the owners who see the values spiral. Our collective investments are concentrated in London and the South-east. Even our people are sucked there. And these investments of ours are immediately added to the value of each benefitting site.

    This characteristic of varied land rental values in different parts of the country is key to a revenue system that is truly progressive. AGR (Annual Ground Rent) would collect 5% of all site values a year into the exchequer. And cancel the damaging taxes described above.

    Picture then how a site with a low rental value (Sutherland?) would be charged a lower AGR than a similar sized site with a high rental value (central London?). Each site owner would be paying the EXACT price of the socially created amenities from which they benefit.

    Now THAT is progressive. AGR please!

  3. W Brown says:

    Not before time. In fact way behind time. The rest of the UK has been asleep at the London wheel for generations.

    The London Allowance/Weighting has been on the go for nearly a century. This is now worth between £3000 and £6000/yr. So anybody in public employment in London is paid that much more for doing the same job as elsewhere in the UK. This means that a disproportionate amount of overall UK tax receipts end up in London. But then the private sector says it has to do the same to compete for skilled workers so employees of a particular company are paid more than elsewhere and more of that companies earnings are circulated in London.

    When council houses were put up for sale at certain percentage of the market value – have a guess at which tenants gained most. And yet in the same place, now that council houses have ended up in the private sector, and a decreasing number of people can afford them, councils are now desperate to decant their poor/unemployed to other ‘more affordable’ areas. The richest place in the UK doesn’t want to look after it’s own. London is on it’s way to becoming a rich persons ghetto. One of the best reasons for HS2, from the London point of view, is that they will be able to keep people who clean their toilets at a greater distance i.e. the rest of us will ‘service’ London. This is medieval stuff – the equivalent of walled cities.

  4. john young says:

    Instead of our usual Scottish whinge from the unionists I may say ,we should be bringing to the fore plans/ideas that are progressive/far reaching,that will create good well paid work for our young people who are still emigrating in huge nos.

    1. Ian Kirkwood says:

      When each pays the exact value of services received by area, it at last becomes affordable not only to live in areas with lower rental values, but also to engage in enterprises there (jobs).

      AGR please!

  5. Ian Kirkwood says:

    The article illustrates how concentrating public investment in amenities or infrastructure in a location provides great benefits there (paid for by of all of us). But this need not be a barrier to fairness.

    How?

    By collecting Annual Ground Rent instead of taxes.

    When society claims back the increased site values that it has just created (at no cost to site owners; just the passing on of value), it balances the contributions and benefits across the land. This is because high AGR will be collected where the high site values have been created. And low AGR is collected where the site values are low.

    You pay for exactly what you receive – and tax-induced depopulation of the periphery is halted.

  6. Anton says:

    Here’s the figures (source: House of Commons Library)

    Public spending per head by country and region, 2014/15: £ per head expenditure = 100

    North East 9,347 = 105%
    North West 9,197 = 103%
    Yorkshire and the Humber 8,660 = 97%
    East Midlands 8,159 = 92%
    West Midlands 8,683 = 97%
    East 7,881 = 88%
    London 9,840 = 110%
    South East 7,756 = 87%
    South West 8,295 = 93%

    England 8,638 = 97%
    Scotland 10,374 = 116%
    Wales 9,904 = 111%
    Northern Ireland 11,106 = 125%

    UK identifiable expenditure 8,913 = 100

    “The table shows considerable variation between the different parts of the UK. For example, public spending per head is £8,638 in England compared with £11,106 in Northern Ireland – a difference of around £2,500. Public expenditure per head in Northern Ireland is 25% higher than the UK average, in Scotland it is 16% higher and in Wales 11% higher. There are also differences in spending levels between the English regions where spending per head ranges from £7,756 in the South East to £9,840 in London. In interpreting the data, it is necessary to bear two points in mind. First, the scope of the public sector varies between countries. For example, water supply is in the public sector in Scotland and Northern Ireland but in the private sector in England and Wales. Second, the figures are intended to give a broad overview and cannot be regarded as a precise measure. This is because it is not always easy to decide who benefits from particular expenditure and simplifying assumptions are made in compiling the data. Small differences in expenditure between regions should not, therefore, be regarded as significant.”

    But London first? I think not.

    1. Connor McEwen says:

      Barnet consequences miss-balance boom boom.

    2. John S Warren says:

      Much “Public Spend” is passive, ameliorating, compensatory. It is economic statics. At best the underlying purpose is to ‘tread water’, and as political rhetoric the main purpose this has come to serve is to measure failure, and attempt to reconcile the public to accept the status quo. It is an appeal to a form of quietism, if not resignation. This isn’t good enough; intellectually, politically or practically. It represents a redundant mode of thought.

      Infrastructure spend is economic dynamics; it generates growth, value and wealth.

      With all due respect I think you are looking at the wrong things. You have begged the question.

    3. Mike says:

      In the case of the figures not within England the added “reserved” expenditure is included. In other words in the case of Scotland Wales and NI the expenditure figures are inclusive of expenditure not spent in Scotland NI or Wales but by the treasury on reserved issues such as defense foreign policy and Scotland NI and Wales contributions to London spend.

      Totally misleading inaccurate and frankly bullshit.

      The money actually spent in Scotland if far less than the revenue raised in Scotland. for example the Barnett formula allows Scotland to receive in the region of 24 billion for public expenditure. Scotland raises in excess of 56 billion in revenues. The excess is kept by the London treasury to use at its whim as Scotlands contribution to the UK “Pooling and sharing” of reserved expenditure.
      That’s approx. 32 billion Scotland subsidises the RUK.

      That’s why the Yoon establishment fights tooth and nail to keep Scotland within its criminally corrupt and miserly grip.

    4. Ian Kirkwood says:

      Public expenditure in welfare payments is one thing (due to government tax-induced regional poverty). What gives London and the South-east its unfair advantage is unbalanced per capita investment in infrastructure as in 2014: London £6000+; NE England £230.

      Most parties are shouting bitterly about this. You, Anton, need to read more widely than the Commons library.

  7. Onwards says:

    @Anton.

    It will always cost more per head in Scotland with our geography and smaller population.
    But its obvious that there has been a policy to focus on the city of London with massive infrastructure spending.

    Even HS2 is mostly about expanding the commuter zone.

    1. Ian Kirkwood says:

      It will only cost more in Scotland if we stick with arbitrary taxes. When we embrace AGR (Annual Ground Rent) people will pay for the value of the services they receive. These are NOT the same everywhere. The value of socially provided amenities in London is large compared with those enjoyed in say, Harris.

      In other words, the rental value of sites in London and Harris differs. Collecting that rental value would mean we all pay the exact value of the services we receive. In which case, low rent site owners would no longer have to subsidise high rent site owners. This is what happens right now and is the reason for peripheral poverty and depopulation.

  8. Dougie Blackwood says:

    We had our chance and we missed it. Now we must lie in the bed we have made for ourselves. Dig deep and smile.

    1. Connor McEwen says:

      Or vote SNP and clear out the mauve and true Tories and Whigs.
      Mauve is a mixture of red and blue.

  9. Mike says:

    This is what Yoons mean when they say “Pooling and sharing”.

    1. JohnEdgar says:

      Perhaps a wee typo here. “pulling and sharing” , rather than pooling and sharing.
      Pulling revenues from Scotland and elsewhere and sharing them out in London.

  10. Interpolar says:

    AGR is fine and good, but as with all other level-headed proposals, it will go nowhere if it does not immediately and fore mostly benefit London.

  11. Broadbield says:

    Another penetrating analysis by John. This is all about inequality, a scourge endemic to societies for millennia. The elites have kept the lid on discontent (mostly) through bread and circuses, giving just enough to appease the masses without making the slightest dent in their power and wealth. “Commonspace” discusses a recent report from Oxfam on how corporations steal money from developing countries and the poor and hide it in tax havens. The UK is at the forefront of both of these injustices.

    What it means for Scotland is that when we get independence we must ensure that we elect the right sort of politicians, that we keep up the pressure for effective policies to end these abuses of power and wealth, that the people are better informed and have a real voice in decision-making.

  12. James Coleman says:

    It’s not only infrastructure investment which gives large increases in economic growth. ALL Public Investment in ALL services contributes. Economic growth is much enhanced by a well educated population which is healthy and well cared for, with no worries about what might happen to them if they fall on hard times, or become seriously ill, and when they know they are protected when they are old and retired.

    So if Public Expenditure is not a bad word as far as London is concerned let us have a lot more of it outside of the South East of England. Let us dump austerity and get the country moving with Keynesian economics.

  13. Anton says:

    Thanks to all who responded to my post. I don’t disagree with any of you. However, my problem with the original post remains uncorrected, for two reasons.

    First, that it seems to imply that infrastructure spending is primarily a matter of transport. It isn’t. It also includes hospitals, power stations, windfarms, etc. etc. The IPPR North report (on which the original argument relies), disregards this and focuses entirely on transport, where there is indeed a clear disparity between London and the rest of the UK.

    Second, is this so surprising or unjustified? The boom in London’s population has created clear and evident transport problems, so that’s where money has been going. In Scotland, as Onwards points out above, there’s a different problem, which is the difficulty of providing public services to a scattered population across a large area. So that’s where money is being spent. (And quite right too, in my view.)

    But for us to complain that too much is being spent on transport infrastructure in London is rather like a Londoner complaining that Scotland is spending too much on supporting rural communities, on which London spends nothing. Well it wouldn’t, would it?

    It all comes down to local needs and priorities. To single out one aspect of infrastructure spend doesn’t really take this into account.

    1. John S Warren says:

      Yes, it is surprising and unjustified. I almost exclusively used figures for England alone. Scotland is virtually irrelevant to the actual case in the paper. That was deliberate. There is an appalling mismatch in population/resources (in urban centres) between London and the rest of England.

      You have also neatly turned the cause and effect relationship upside down to serve a thoroughly bad argument. Part (I don’t claim ALL, and need not do so) of the reason for London’s excessive ‘success’ is the infrastructure spend itself. Infrastructure spend creates extraordinary growth. I did not list the projects for fun. This is how it is done. Only nobody outside London ever receives anything more than ‘pint-sized’ projects compared to London. And London needs more and more resources just to stand still. I do not think you have grasped the economic dynamics of infrastructure spend on the economy. They have in London, and they are going to take it all.

      You say it is all ‘transport’ and there is other infrastructure spend. True there is, but London takes most of the national infrastructure spend however you slice it and dice it (and disproportionately spends it on transport). There is a reason for this transport spend; transport has the greatest impact on economic growth; both directly and indirectly. It produces very big, and fast returns (the IPPR understands this; it appears you don’t), and it feeds it into property values. Hence London determines everything. Take its monopoly away and it will not grow so fast. Other areas could probably grow faster given a smaller spend because property is cheaper (far greater value for money). Why on earth do you think they have to put everything underground in London – even HS2? If you want big economic returns, spending elsewhere in England is cheaper (I illustrated this with HS2), will enhance more people’s lives and will produce returns that are not all taken by London landlords, for nothing.

      I do not think you have enhanced your case, or really made a case. I find it amazing that so many people in Britain are so easily seduced by a Metropolis that rips everyone off in Britain; caused the worst financial crash in 80 years (many of the worst excesses, even by US institutions, happened in London), has been bailed out by the whole country paying for it through the biggest increase in the National Debt, and a transfer of funds from the public sector to pay off losses in the private sector (mostly in London), and goes on wasting resources and ripping everyone off as if nothing has changed: because it hasn’t.

  14. Ian Kirkwood says:

    And when it is found that sharing per capita investment equally around the country is not achieved, how can fair adjustment be made in keeping with natural justice?

    An exact redistribution of the new wealth created by that public investment is achieved by collecting the site rental values that have just been generated: High AGR from places that benefitted from high investment; low AGR from the rest. AGR is highly progressive because the charges exactly match the rental value of each site (created by all of us).

Help keep our journalism independent

We don’t take any advertising, we don’t hide behind a pay wall and we don’t keep harassing you for crowd-funding. We’re entirely dependent on our readers to support us.

Subscribe to regular bella in your inbox

Don’t miss a single article. Enter your email address on our subscribe page by clicking the button below. It is completely free and you can easily unsubscribe at any time.